The Wertheimer Model: Succeeding in Business Even Amid Discord

Only in 2006 was much of American business first introduced to the founder of the Israeli industrial giant Iscar Ltd. That’s when Warren Buffett purchased Iscar for his Berkshire Hathaway portfolio. The often-myopic business press treated the $4 billion Buffett-Wertheimer alliance as a novel marriage. Fact is, the union of these shrewd minds and their businesses was inevitable.

Like Buffett, Wertheimer is a practical man with vision. He started his metalworking business in a Western Galilee shack in the 1950s and grew it into the global manufacturer it is today. Just as Peter Drucker preached for years, Wertheimer has always embraced the idea that there is but one purpose for a business: creating a customer.

Yet he has done even more, a la the Drucker philosophy. The former Israeli Army commando has repeatedly borrowed a page or two from the father of modern management. Drucker wrote that a business “has to be in a community, has to be a neighbor, has to do its work within a social setting.”

In the usually disruptive environment of the Middle East, Wertheimer has done just that—and then some.

Back in the 1980s, he began to chart imaginative new directions, launching industrial parks that mix industry, education and culture. To attract workers to his operations near the Lebanese border, he created Kfar Vradim (Rose Village). As impressive a business and residential community as you will find anywhere in the world, Tefen industrial park and Kfar Vradim make up part of the Wertheimer Model. They reflect what a business can and should be in the world.

When I first met Wertheimer at his Tefen headquarters in 1997, he painted a word picture of his “road of commerce” along the Mediterranean Sea. “This corner of the world has a good future,” said the pragmatist with a heart full of hope. In a part of the world best known for conflict, he said, business and commerce are “helping to let a complicated situation come to a profitable end.”

In 1997, it was actually just the beginning. Buffett connected with Wertheimer and son Eitan less than a decade later. The celebrated Oracle of Omaha found kindred spirits in the Israeli entrepreneurs and embraced the character and spirit of the Wertheimer Model. “They’re a remarkable people and a remarkable business,” Buffett told The Jerusalem Post.

The deal with Buffett done, the octogenarian Wertheimer could have scooped up his profits and capped a very successful career. That’s not part of the Wertheimer Model, though.

At the time, nothing gave me more pleasure than writing the following in my magazine column: “Wertheimer and his family have announced that profits from the acquisition by Berkshire Hathaway will be applied to industrial parks and the promotion of peace in the often troubled region.”

Then I added: “I recall something…Wertheimer said when I visited Iscar in 1997. Peace is good business.”

Stef Wertheimer still believes that. In the Post’s magazine, he recently wrote an article headed “Cairo’s business-savvy protesters.” In this published praise from an industrial Caesar, Wertheimer wrote: “Harvard Business School could write a case study on Tahrir Square, for the principles the protesters demonstrated there are the same ones needed for any successful entrepreneurial effort. Indeed, Israel too might learn a thing or too from the protests.”

Wertheimer enumerated the Egyptians’ street-smart skills as entrepreneurs: 1) stating a clear goal, 2) believing in the project, 3) maintaining a cool head under pressure, 4) keeping one’s word, 5) employing the use of technology, 6) managing the team toward a common goal, 7) looking to the future while retaining the important aspects of the past, 8) transferring pride into action and 8) making peace with one’s competition.

“Egypt’s ‘product’ has now been presented to the whole world and has for the most part received an enthusiastic reception,” Wertheimer wrote. “But now the hard work really begins, ushering with it the need to formulate a revised constitution that will include free and fair elections. Perhaps equally important is the need to create opportunities so that the vast population of Egypt can finally take their rightful places in society. In particular, I am referring to employment. In order to achieve financial and social stability, Egypt must be willing to undergo another revolution, this time an industrial one.”

Wertheimer also issued a cautionary note: “By following this prescription, Egypt can avoid the U.S.’s mistake of diminishing its own production and manufacturing (which created a huge trade deficit and dramatically increased unemployment.) Egypt would do well to emulate the policies of countries like South Korea, Singapore, Japan, and China, in which industry helped enormously in making a better life for their citizens.”

Today, an economically flaccid United States might take the hint and borrow from the Wertheimer Model. Warren Buffett, I’m sure, would endorse such an effort.

After all, the Wertheimer Model has proved successful in the toughest of business environments.

J.F. McKenna is a veteran business journalist and communications consultant. His e-mail is jf_mckenna@yahoo.com .